Unless there are substantial revisions, there is a lot of ground to claw back to even get close to this year’s OBR forecast

“This is another set of disappointing figures. We had been led to believe that last month’s big overshoot was largely due to one-off factors. However, there is no sign of any reversal in the June data and May’s borrowing has been revised up as well, so we’ve slipped yet further behind last year’s already high running total.

“The slowdown in revenue growth over the early part of this year is a cause for concern. However, the fact that this weakness mainly comes from income tax is a little odd given the robust labour market data of the past few months. The above-inflation rise in the personal allowance may account for some of this, but otherwise it’s difficult to account for these disparities.

“Obviously these figures can be prone to revision, but even so things don’t look good at the moment. On the current budget measure the deficit is already running £6.5bn ahead of 2011/12 after just three months. Given that the OBR forecast has the deficit falling by £3bn in 2012/13 there is a lot of ground to claw back to even get close, unless we get some fairly sizeable revisions to this data.

“We are optimistic that the growth performance will improve over the second half of the year, which could help to make up some of the lost ground. However, on the flip side, the economy must still negotiate its way through a number of headwinds which could threaten an even worse outturn. We’ve still got another four months before the OBR makes its next forecast, but already it’s looking like they will need to make some pretty hefty downgrades to this year’s growth forecast and upward revisions to the projections for the deficit.”

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